Adani’s ‘expensive’ power deal triggers controversy in Bangladesh
A report in the Daily Star, which is now being shared widely with Adani’s business dealing coming under global scrutiny, says nothing explains the-then Bangladesh government’s rationale for signing the power purchase agreement for the deal two years later
Hyderabad: A deal signed by Adani Power Limited, part of the Adani Group, with the Bangladesh Power Development Board (BPDB) in November 2017, is now under the scanner, with even the BPDB calling for a revision of the deal.
According to media reports from Bangladesh, the deal was struck with Adani Power under the 2011 Indo-Bangla Framework Agreement for Cooperation on August 11, 2015, interestingly, just about two months after Prime Minister Narendra Modi’s maiden visit to Bangladesh.
A report in the Daily Star, which is now being shared widely with Adani’s business dealing coming under global scrutiny, says nothing explains the-then Bangladesh government’s rationale for signing the power purchase agreement for the deal two years later, with legal and energy experts finding the deal to be ‘exceptionally expensive’ and ‘overtly favouring’ Adani Power.
“The way I would put it is heads Adani wins, tails you lose. The contract is so biased against the interests of Bangladesh to the point that one has to wonder why any sensible person would sign it on behalf of the Bangladeshi government,” Tim Buckley, an energy economist and founder of Sydney-based Climate Energy Finance Australasia, is quoted as saying.
The report points out that there is virtually no scope for BPDB to get out of the contract for power purchase from the plant, which was built at an estimated cost of Rs.14,816 crore on ‘unconditional and irrevocable’ sovereign guarantee from the Bangladesh government that it would purchase the entire power generated for 25 years.
Read the full story from The Daily Star here: Adani power purchase against ‘public policy’: How could such a deal be signed?
“It is a punishable offence to sign such a contract — we believe that our agencies have the ability to identify the corruption in this deal,” the report quoted authorities of the Consumers Association of Bangladesh, while Bangladesh Nationalist Party Secretary General Mirza Fakhrul Islam Alamgir termed the power deal “unnecessary and uneven” and said Bangladesh would be unable to reap benefits from the project.
Meanwhile, other reports indicated that the BPDB had communicated with Adani Power earlier this month, asking for a revision of the PPA.
International current affairs magazine for the Asia-Pacific region, The Diplomat, in a recent report said that under the PPA, Bangladesh would have pay $450 million annually for 25 years as capacity and maintenance charges, even if it does not take any electricity from Adani Power Ltd. If Bangladesh wants to use electricity from Adani, it would have to pay an additional amount for coal, the report said, adding that the agreement provides for price fixing of coal by combining Indonesian and Australian coal prices. Thus, each ton of Adani’s coal would cost Bangladesh around $400, which was 60 percent higher than the usual price of coal, according to BPDB.
“It is the Adani Group that comes out as the beneficiary of the deal. Adani’s coal would travel on Adani ships to reach an Adani-owned seaport, and from there an Adani-built railway would haul the coal to Adani’s Godda Power Plant. Finally, the generated electricity would be transmitted from Godda to Bangladesh via Adani-built high-voltage lines,” it said, adding that the PPA passed all associated costs of coal, including shipping and transmission, to Bangladesh, which made Adani’s electricity over five times more expensive that the market price of bulk electricity in Bangladesh.
It also says that this was a purchase that Bangladesh did not need in the first place, because Bangladesh’s power-generating capacity exceeded its peak demand by over 40 percent.
The PPA is also now being sharply criticized in Bangladesh, with Transparency International Bangladesh terming the contract “unequal, opaque, and discriminatory.”
